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Exam 26: Sole Proprietorships and Private Franchises

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Question 31

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The parties to a franchise agreement may determine what constitutes the grounds for the termination of their relationship.

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Question 32

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Euro Autos & Trucks,Inc.,licenses Fancy Vehicles Corporation,an automobile dealership,to sell its products.This is

A) a chain-style franchise.
B) a distributorship franchise.
C) a manufacturing franchise.
D) no franchise.

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Question 33

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Doc's Sports Club enters into a franchise agreement with Elite Fitness Centers that provides for termination at any time for "cause." Doc's fails to meet Elite's "Friends and Family" membership sales quota.Is this "cause" for termination? Explain.

A franchisee normally does not pay a fee for a franchise license until after the first year of using it.

Nina wants the exclusive right to sell Oven-Rite Corporation appliances in a certain area.If Oven-Rite agrees,it will likely require Nina to pay

Under no circumstances may a franchisor establish an additional franchise in a territory allotted to a franchisee.

One of the disadvantages of a sole proprietorship is that the owner is liable for the losses of the business.

A franchisor can suggest retail prices but cannot mandate them.

A sole proprietorship continues in business despite the death of the owner.

Leigh wants to go into the business of construction contracting.Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be

Jody owns KuppaJava Kiosks,a sole proprietorship.Jody's liability is

Star Resorts Corporation wants to terminate its franchise arrangement with Tony.Their contract does not provide for notice of termination or set a time for winding up the business.This means that to wind up,Tony

Pat enters into an agreement with Ole! Food,Inc.,to operate a franchise in Region City.Later,Ole! grants franchises to others within the city,Pat files a suit to close them.This suit will likely

A sole proprietor may own and manage any type of business.

If a party to a franchise contract fails to perform,he or she may be subject to a suit for breach of contract.

Bret buys a franchise from Comida Mexicano Ltd.If their agreement is like most franchise agreements,it will specify that Comida can terminate the franchise

Jack buys a Kitchens,Inc.,franchise,which the franchisor later terminates.In determining whether the termination was proper,a court will generally

A franchisee may be required to pay for certain of the franchisor's administrative expenses.

Normally,a franchisee determines the territory that it will serve.

Fred starts up,and assumes the financial risk of,Graphic Ads,a new marketing enterprise.Fred is